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But with global sugar prices at 27-year lows and a surplus expected to reach 2.44 million tons next year, Meylan acknowledges the day is coming when many American farmers won't be able to survive in the global marketplace.

"Unless drastic measures are taken to fair up global trading policies, sugar beet growers throughout the United States will begin to disappear," said Meylan, who serves as president of the Monitor Sugarbeet Growers Association.

"We've already seen growers in California, Ohio and Texas go out of business, and more will certainly follow if we continue down the same road," Meylan said.

Sugar beets are still grown in 12 states: California, Colorado, Idaho, Michigan, Minnesota, Montana, Nebraska, North Dakota, Oregon, South Dakota, Washington and Wyoming, according the American Sugarbeet Growers Association.

But the American sugar industry has become increasingly sticky with the advent of sugar from both Mexico and Canada - sugar many feel is being pumped into the U.S. market unfairly.

According to Bay City farmer Ray VanDriessche, who serves as president of the American Sugarbeet Growers Association, Mexico and Canada have taken advantage of international trade policies by finding loopholes that allow them to import sugar beyond set limits.

Canada is exporting Brazilian-grown sugar by concocting a mixture of sugar and molasses that is shipped to the United States, where the sugar is extracted and the molasses is sent back to Canada to be used again, VanDreissche said.

"Basically, this mixture is 95 percent sugar and 5 percent molasses," VanDriessche said. "The U.S. filed a lawsuit to block this practice and won, but the Canadian government filed an appeal and the decision was reversed. Now, the U.S. is awaiting a decision on its own appeal."

The case is pending in the U.S. Circuit Court of Appeals.

The trade problems with Mexico are more complex and revolve around two different interpretations of the North American Free Trade Agreement, which went into effect in the mid-1990s. VanDriessche said the real issue is that the Mexican government has simply ignored NAFTA guidelines.

VanDriessche said Mexico believes it should be allowed to export all of its excess sugar, which could be as much as 600,000 tons annually. The United States says NAFTA rules prohibit this because Mexico produces 100 percent of its domestic use plus a surplus each year.

Terms of NAFTA say Mexico can only export to the United States 25 tons of sugar before paying a tariff of a little more than 15 cents per ton. Next year, Mexico will be allowed to export 250,000 tons before the tariff kicks in. But the United States says because Mexico is a surplus producer, it should be allowed to send only 110,000 tons here, under NAFTA guidelines.
"This is a very difficult issue to grasp, but essentially what has happened is that Mexico is refusing to follow the rules," VanDriessche said.

Furthermore, Mexico decided this year to pay the U.S. tariff in order to export additional sugar. And, the Mexican government has stopped accepting high-fructose corn sweetener from the U.S., a commodity the U.S. should be allowed to export to Mexico under NAFTA guidelines.

"The U.S. could turn around and stop accepting Mexican sugar, but our government has decided that two wrongs don't make a right and we will adhere to the trade policies we signed," VanDriessche said.

The effects of increased imports, combined with healthy domestic crops during the past three years, have been staggering for both U.S. sugar beet and sugar cane growers, who have watched prices drop nearly 33 percent in the past four years.

"Because our government has no enforcement policies in place, Mexico and Canada have flooded our market with sugar and have driven our domestic price to drastically low levels," said U.S. Rep. James A. Barcia, D-Bay City.

In July, refined beet sugar prices slipped from 27 cents per pound last summer to around 19 cents per pound. Raw cane sugar prices also fell from 22 cents per pound last summer to 18 cents per pound.

Prices paid to growers have also declined, even though consumer prices for products containing sugar have increased.

"The people making the most money are the companies selling candy, cereal, cookies, cakes and ice cream," Meylan said.

According to Paul Pfenninger, vice president of agriculture for Monitor Sugar Co., the last of four payments for the 1999 crop was made to growers Wednesday. The payment of $1.92 per ton brought the total payment for the 1999 crop to $32.92 per ton.

This is a decline from the payment on the 1998 crop, when Monitor Sugar Co. paid growers $34.97 per ton.

"We were just hoping and praying for $32 per ton," said Meylan. "We'll hope and pray again next year."

According to VanDriessche, $32 per ton doesn't cut it.

"In some cases, it costs producers about $768 dollars per acre to produce sugar beets. That works out to more than $40 per ton of sugar," VanDriessche said.

Local sugar beet growers haven't seen prices like that since 1996, when Monitor Sugar's total payment was $41.62.

Luther Markwart, executive vice president of the American Sugarbeet Growers Association, said he believes the market is beginning to recover, as evidenced by the recent recovery of sugar prices to around 22 cents per pound for both refined beet sugar and raw cane sugar.
"I think we are climbing out of the pit, but as long as the U.S. government has a surplus on hand, we won't get back to the way things were a few years ago," Markwart said.

But Markwart said it is important for the U.S. to have some surplus sugar on hand in case domestic production does not meet estimates, like it did in 1990, when frost destroyed nearly half of the raw cane sugar grown in Louisiana.

Meylan said he would like to see serious reform in the way America does business on a global scale.

"There are 41 countries that export sugar to the U.S.," Meylan said. "About 80 percent of our domestic use is produced by American sugar beet and sugar cane growers. That should mean that we only need to import enough to fill the other 20 percent."

But Meylan said that hasn't happened and over the past two years, the surplus sugar has begun to pile up.

"We've had excellent sugar beet crops in Michigan the past few years," Meylan said. "But we have farmers taking part in government-funded programs in which they plow under their fields to take sugar beets out of production. Is this the American way? Asking us to cut our production so we can import more?"

Meylan is referring to the government's Payment-In-Kind program, which paid sugar beet producers to plow under their beet crops.

And earlier this year, the USDA entered the sugar market for the first time since 1986, purchasing 132,000 tons of refined sugar at a cost of $54 million.

"Clearly, the future of sugar is not as rosy as it once was," Barcia said.

"I don't think too many farms would oppose international trade policies, but there is a big difference between free trade and fair trade," Meylan said. "And right now the U.S. is not competing on an even playing field."

But Richard Leach, executive vice president of the Great Lakes Sugar Beet Growers Association, says he is confident trade problems with Canada and Mexico will be resolved.

"Foreign countries, especially Mexico, that import sugar into the U.S. market, must understand that they have a stake in the U.S. market and if prices go too low, they won't make any money either," Leach said.

"On the flip side, our own government must realize that there are limits to how much sugar it can import. If we continue to let other countries violate trade policies, sugar will end up just like oil and America will become dependent on other nations for its supply," Leach added.

Barcia said the first step to solving the trade problems is to have focused and honest negotiations with government leaders around the world to make sure all countries are on an even playing field.

He is confident the courts will uphold the original decision in the case against Canadian imports and believes the new Mexican government, set to take control early next year, will work with the United States.

"If we don't get the supply of sugar entering the U.S. under control in the next few years, prices will remain low and producers will continue to struggle," VanDriessche said. "And if farmers don't get an adequate return for their crops, they'll have to think about getting out."